Ben and Dominique explore the recent strong US CPI and PPI prints, driven by supply chain pressures and volatile components like energy-sensitive services and hotel prices. They analyse the policy dilemma of sticky inflation alongside wage disinflation, suggesting business markups and corporate market concentration—rather than the labour market—may be sustaining price pressures. While the Fed is expected to proceed cautiously to avoid triggering an unnecessary recession, focus shifts to a growing consensus for more hikes, even among the most dovish FOMC members such as Mary Daly. Dominique notes that retail sales figures reflect negative real wage growth for consumers and maintains a base case forecast of just one final rate hike in December.
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